ABSTRACT
Often a standard clause in a recording contract a record label will claim ownership of commercialization rights to promote an artist and his or her recordings. However, many artists retain as many of these rights as possible, aiming to control their image and negotiate better deals with outside sources for the sale of goods, including clothing, perfumes, video games, and commercial tie-ins. Licensing for merchandising are usually negotiated between the merchandise manufacturer and the party that owns the merchandising rights. The scope of these agreements cover exclusivity, territorial boundaries, and the length of term of the license. Often, merchandising agreements are linked with other contractual relationships, such as recording contracts, distribution agreements, and so on. Payments for the right to obtain a merchandise license are based on royalty payments as well as advances. Royalty payments by licensee will range from 1 percent to 50 percent. Royalty payments may also be expressed as a specific flat rate (e.g., $1,000 per year) or rate per unit (e.g., $.50 per unit sold) or a percentage based on net or gross receipts, minus a deduction for overheads such as manufacturing costs, shipping costs, and advertising and promotion expenses.
